It is government responsibility to make compulsory insurance work in Nigeria- AKINBOYE

Gemrock Management Company, a private equity firm recently made strategic acquisition in Standard Alliance, repositioning the underwriting firm on the part of growth and value creation for shareholders. Bode Akinboye, group managing director (GMD) of the Company in this interview with Modestus Anaesoronye bares his mind on the new investors, vision for SA and what shareholders should expect. Excerpts

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A new management firm, Gemrock has recently made some strategic acquisition in Standard Alliance Insurance plc, could you tell us about Gemrock?

Gemrock is a special purpose vehicle that I put together and invited some like minds to join hands with me, with a view to taking strategic stake in Standard Alliance, assume management control of the company and to turn it around. And so itâ€™s just an SP created for that purpose. In terms of management capacity, we have experienced professionals, accountants, insurers, lawyers. We have amongst us a senior advocate of Nigeria as part of Gemrock. We have fellows of the Chartered Institute of Accountants as well as fellows of the Chartered Insurance Institute. We have a team of very rich professionals who have played significant role in the financial services sector and who can impact positively on the operations of the Company. We also have the capacity to attract new investment into the Company because of our credibility and pedigree.

Having made this acquisition, resulting in injection of fresh funds and new management, what does it mean for Standard Alliance as a company?

First, you are aware that this is a company I worked for, for a period of 13 years before I left some years ago. And with my team then, we were able to position the Company as a very serious player in the insurance sub-sector. We moved from about 100th position when it started to about top ten treasured firms in the market. For a significant part of the 13 years we consistently paid dividend and bonuses to our shareholders. So, for us, it is like coming back home to recreate an institution we so much believe in, that has played very important role as a responsible corporate entity and can still do it again. For me, it is an opportunity to come and reinvent the system and create value for the stakeholders.

But specifically, how does the acquisition position the Company for competitiveness in the market?

With this acquisition, the Company is having more liquidity at the end of the day. It is better structured, corporate governance is higher as a new board has been constituted, the management team has been reconstituted also, some new and some who have worked with us before. So, we had to get some of them back from other insurance Companies in the market where they were working. We also brought in some professionals in the area of investment and retail marketing which are areas we want to focus on. So, we are set to change the fortunes of the Company and reposition it for better performance.

A recent development in the Company is the merger of SA Life and Standard Alliance Plc. What is the reason for the merger?

As part of the investment arrangement made by Gemrock, we believe that the management model that is succeeding very well in Nigeria today is composite business. We have examples of companies that are doing very well in the market running a composite structure, one, because it enables economics of scale. It enables cross selling and also enables shared services while also complying with the insurance Act that says each of the businesses must be accounted for separately. You need not to have different directors; you need not have different office locations everywhere all over the country; one management team which though could be enhanced; one direction and one effort to ensure that two sides of the business are well catered for. This is the synergy we have seen and since it is succeeding with companies, we have no need doing it differently. So, we have gotten approval in principle from NAICOM to proceed with the merger and we are almost ready to file with the Securities and Exchange Commission which also will give approval for the merger. Once we are through with that we will go back to NAICOM for the regulatory approval and we will communicate that to the Nigerian Stock Exchange. Itâ€™s a long process and we hope to conclude that before the year runs out.

You have been recently appointed the GMD of the new company about a decade after you left the industry. What is Akinboye brining?

I am not coming with any luggage, but we see an industry that has quite a lot of potential that is yet untapped. We see an industry that is capable of contributing quite significantly to the gross domestic product and help create investment and overall wealth for the nation. And Standard Alliance represents the spring board for us to be able to express that. We believe that with the right people, right technology, access to capital we can actually become a market leader. So, we are coming with a team of very rich experienced men and women not only in insurance but also across the financial services industry.

Looking back, what would you say has changed from the time you left the industry nine year ago and now?

So many things have changed. First, the operating environment has become more competitive. You have new entrants, you have multinational insurance companies operating from Nigeria, and you are no longer competing locally but globally because you are competing with the best in Europe, best in South Africa who are all here now in Nigeria. Secondly, the political environment has changed. PDP was in government for 16 years and people prayed for change and a new party, the APC has come in with a new culture of how government businesses should be run. This should impact on insurance. Thirdly, the regulatory environment has changed, not only in NAICOM but across the financial services market. So, there is a tighter regulation and emphasis has now changed to corporate governance and risk management. All of this for me is good, not only for insurance but for business generally.

Looking at the industry today, would you say the sector has played its role in the economy?

Of course, the industry is playing its role and would continue to play. There is always room for improvement. People will always say insurance has not done much, they are not innovative enough and all that. But when you look at other climes, you find that government has actually been the driver of insurance penetration using compulsory insurances. There are reasons some insurance products are made compulsory like the third party, insurance of buildings under any definition, as well as group life. They are of public interest targeted at protecting common wealth because there is loss of value when accident occurs and there is damage, which are never replaced. And if these classes of insurance succeed, naturally other areas of insurance will succeed. This is where government must come in to support insurance industry.

Today, the question is, have we succeeded in compulsory insurance? I think we are making progress but we are not yet there. So, it is the responsibility of government to make sure that the laws relating to compulsory insurance is policed and enforced and culprits are brought to book from time to time, to ensure total compliance. From there, insurance companies will be able to rise strongly, create investment and long term capital to support other sectors of the economy.

Not quite long you came on board we are beginning to see positive changes in your bottom line particularly the half year, whatâ€™s the magic?

Well, what we promised our investors and shareholders are that we are going to turn around the fortunes of the company because we know itâ€™s possible. Itâ€™s not a matter of magic. It is just about observing certain rules. First, is the role of engagement with our customers. For an institution like Standard Alliance Insurance Plc that has been in existence under this new name since 1996, effectively close to 20 years in this operation, we have large number of customers in different sectors of the economy â€“oil and gas, financial institutions, telecoms, educational institutions as well as high net worth individuals. We are everywhere. So, when we came in we addressed key issues. One, we addressed the issue of people, to make sure that the right people are put in the right places, experienced people, people who understand what it means to service customers with urgency, delight them and to exceed their expectations. That is, people who understand the kind of service culture that is required now, which is to make sure that the customer is number one because that is the reason we are in business. We also dealt with the issue of processes to ensure that we remove a lot of bottlenecks in processing of transactions, claims and feedback mechanisms. Then, we looked at the products and simplified them so that they become easy to understand. We also made sure we settled a lot of inherited claims. We have paid quite a lot and we are still paying. We have shown commitment, we have refocused the company along that line and our customers can now see that we are moving in the direction of why the Company was established in the first instance. And that is to pay claims. We have built this culture in the system and everybody is aware that our number one priority is to pay claims. The message is getting to the market and that is what is driving the patronage. And because we have improved on our processes, we have reduced a lot of wastages, block all loopholes and that immediately has increased savings in terms of cost optimisation. So, when you combine that â€“ slight increase in premium as well as savings in cost, that definitely will lead to improved bottom-line. That is why I said itâ€™s not magic, we are only following the science of management which is delight your customers, grow your top line, operate tight cost control and create value.